Teutons tussle over Internet VOD

Free-to-air webs object to pubcasters' plans

BERLIN — Germany’s deep-pocketed pubcasters are planning to introduce pay video-on-demand via the Internet — and that has their commercial rivals crying foul.

The main point of contention is the fact that ARD and ZDF plan to spend millions on a commercial enterprise that’s not part of the pubcasters’ explicit broadcasting mission, and one that will face major online competition. The pricetag of the service is said to be seven figures.

The pubcasters want to launch the online video platform to compete with the likes of YouTube and offer “quality content from 60 years of German TV history,” says ZDF topper Markus Schaechter.

The move aims to squeeze more coin from the pubcasters’ extensive programming libraries, which include shows such as ZDF’s “Der Kommissar” and “Ein Fall fur zwei,” by setting up the platform — dubbed Germany’s Gold — as either a pay-per-view or ad-financed service.

“It’s about the prospect of making big money in the VOD segment,” Schaechter told the Financial Times Deutschland last week.

Not surprisingly, the plan is irking commercial rivals RTL and Pro-SiebenSat.1, whose own proposal for a joint online video platform similar to Hulu was recently shot down by Germany’s antitrust watchdog.

The cartel authority argued that the venture would further strengthen the duopoly between the two companies within the country’s TV ad market.

Juergen Doetz, president of Germany’s Assn. of Commercial Broadcasters, has admonished ARD and ZDF for not concentrating on their core mission — providing independent and objective news, as well as educational and cultural fare plus entertainment.

The ARD group, which includes nine regional affiliates with more than a dozen channels and some 55 radio stations, and ZDF, which has 10 channels, receive a total of some €7.6 billion ($11.3 billion) a year. This coin comes from annual license fees paid by homes that own a TV plus funds raised via limited advertising.

European media regulators take a dim view of pubcasters using TV license fee money for commercial endeavors. To get around this, ARD and ZDF aim to operate the planned VOD platform through their commercial subsidiaries, WDR Mediagroup and ZDF Enterprises.The plan may still have to secure cartel office approval, and whether the watchdog is more lenient with ARD and ZDF than it was with RTL and ProSiebenSat.1 remains to be seen.

The pubcasters have faced mounting criticism in recent weeks from politicos as well as commercial rivals for what they see as excessive spending. ZDF acquired the 2012-2015 UEFA Champions League soccer free-TV rights for some $76.5 million per season.

Burkhardt Mueller-Soenksen, media policy spokesman for the FDP, the junior partner in Germany’s ruling coalition, also slammed the pubcasters for spending millions covering the wedding of Prince William and Kate Middleton, doubling up on an event that was already available to German viewers on RTL, news web N24 and the BBC.

Mueller-Soenksen says the pubcasters wasted TV license fees, adding that ARD’s and ZDF’s coverage was the same as that of other channels and was “neither quality television nor in line with the joint broadcasting mission.”

ZDF editor-in-chief Peter Frey dismissed charges of high costs, pointing out that the BBC supplied the wedding feed free of charge.

The event certainly goosed the pubcasters’ ratings. ZDF nabbed a 20.8 share, well above the average 11 share between 9 a.m. and 3 p.m, while ARD achieved a 34.5 share from 4.48 million viewers.

The continuing battle between the pubcasters and their critics looks unlikely to ease up anytime soon. And GEZ, the organization responsible for collecting TV fees — at a cost of $240 million a year from ARD and ZDF’s coffers — didn’t help matters by adding to the pubcasters’ balance sheet.

While the government and the pubcasters have agreed to streamline the TV-fee collection system, GEZ topper Hans Buchholz recently said the org will have to increase its staff from 1,150 to 1,550 — and therefore its fees — when the new system kicks in in 2013.